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More than Digital Is Driving the Factory of the Future

The manufacturing industry is changing at a fast pace, driven by increased globalisation, fierce competition and increasing customer demand. It signals a deep transformation, which is putting immense pressure on manufacturers, of all sizes, to simplify operations, reduce costs, and increase speed to market. The challenges are complex: Dynamic value chains where manufacturers search for new and improved business opportunities. Secondly, emerging market growth is challenging businesses to rethink supply chains and product strategies. Then there is the growing pressure for product quality, traceability and transparency as well as demands for increasing levels of customer service – forcing manufacturers to compress product cycles to meet growing expectations. And there is even more to be considered by supply chain leaders: They must navigate political and industry frameworks, balance technology infatuation with business strategy and synchronize manufacturing excellence initiatives.

Across all manufacturing value chains, the role of strategic purpose of manufacturing operations is changing at a pace never experienced before. Concepts like digital business, or the German government's Industrie 4.0 initiative, have spurred a rapidly unfolding abundance of industrial productivity frameworks, policies and initiatives. These initiatives all promote digitization and smart factories through the Internet of Things (IoT), artificial intelligence (AI), 3D printing, robotics and cloud computing.

Initiatives are rich with broad-sweeping ideals, and this helps gain momentum. Yet aligning these modernized and/or innovative production capabilities with the supply chain is no easy ask. Multiple initiatives might highlight the importance of the value chain while simultaneously promoting manufacturing excellence in isolation.

Factory of the future initiatives are far greater than the digitalization initiatives that underpin them. The factory of the future is a supply chain strategy that impacts plan, source, make, deliver and service. The pace of technology continues to change and industrial policies are unfolding. So, too, are the increasing risks of misaligning innovative production capabilities with the supply chain. Consider the scenario of improving manufacturing's flexibility. Flexibility has delivered positive value for the investment in the past 12 to 18 months and will continue to receive attention. In the 2017 Gartner Supply Chain Executive Survey, 45% of respondents said improving manufacturing's flexibility is a top five investment area in the next 12 to 18 months. Flexibility is needed as organizations seek innovative ways to accommodate inflated product mixes with existing capacities. The affordability of sensors and cloud storage makes them attractive investments for capturing production data and building models to maximize resources and automate processes.

While the new insights might identify optimal run rates and improve the performance of a specific asset (or entire production line), will those improvements connect with other supply chain processes? Or will production only create constraints and issues? Will other supply chain functions like logistics shoulder higher inventory carrying costs or other unwanted (and unmanageable) complexities?

This research helps supply chain leaders lessen the confusion that technology-heavy factory of the future and better design and align their future manufacturing strategies and roadmaps.

Source: Gartner, More Than Digital Is Driving the Factory of the Future, Simon F Jacobson, 10 July 2017.